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Rep. Mike Ross Responds to ProPublica-Politico Investigation of Pharmacy Sale

In response to our story of this morning, Rep. Mike Ross issued a statement today. Here it is in its entirety; some important qualifications follow:

"This style of gotcha politics is why many folks are fed up with Washington and it is a shame serious debate on reform has, once again, fallen off course. Instead of having civil dialogue over true and substantive disagreements about reforming our broken health care system, outside groups are trying to taint a completely legal and respected small business that my wife and I worked hard for 14 years to establish.

When we sold our family business, Holly's Health Mart, over two years ago, we reported and disclosed all the transactions required by the House Ethics reporting requirements. I also accurately reported the property on my personal financial statement in 2007, when I sold the business. I sold it for the amount that I have indicated it was worth on every personal financial statement since 1999. I spent $316,000 in 1998 constructing the building that houses the pharmacy and sold it for $420,000 in 2007 – the annual return on investment is less than four percent. I would have made more during that time period if I had invested in a certificate of deposit (CD).

I have never done a favor for the buyer, who I have only met a few times in my life. The buyer did not just buy brick and mortar; he bought a successful, trusted, centrally-located and profitable pharmacy in my hometown. In two of my closest races, the buyer supported my Republican opponent in both of them. He has since supported my campaign.

I welcome any debate and review on my voting record and my positions on the issue. I have said all along that we need health care reform in this country; in fact, I ran for Congress to address our broken system. It is for these reasons why I supported health care reform legislation in the Energy & Commerce Committee in order to ensure that we could move forward with the legislative process and give Members of Congress time to read the bill and talk it over with their constituents. We need common sense health care reform that reduces costs, increases access, forces insurance companies to cover pre-existing conditions and protects patient choice. My ultimate goal has always been to pass a health care reform bill that will offer the kind of reforms I can support – a common sense plan that reflects Arkansas values.”

Responding to the congressman’s statement, Paul E. Steiger, editor-in-chief of ProPublica, said:

"The issue here is not whether Rep. Ross filed the proper disclosure forms. Nor is it whether Rep. Ross earned a large or small return on his initial investment in the building. The issue is whether the Congressman received more on the sale of his building than someone without his power and influence would have received for selling this building. As we read his statement, Rep. Ross does not deny that he received significantly more than an arms-length fair-market price for the building -- on top of the very considerable sums he and his wife received for selling and continuing to run the business."

Rep. Ross states that the buyer bought more than “brick and mortar” for their $420,000, that they also bought "a successful, trusted, centrally-located and profitable pharmacy in my hometown." But, as the story noted, the buyer paid an additional $500,001 to $1 million for the business, as well as between $100,001 and $250,000 for agreement not to compete against the new owners. Those payments brought the total value of the transaction to between $1 million and $1.67 million.

Rep. Ross declined numerous requests for interviews over a two-month period to discuss the transaction in question. He still has not disclosed whether he has discussed the pending health care reform legislation with the buyer, who owns a large chain of drug stores and has a clear and pointed interest in the outcome of the health care legislation.

It was merely an allocation of the total sales price for tax purposes.The land is subject to capital gains treatment, the other component is ordinary income. The non compete is differed until realized. The IRS may have an issue with it but it is hardly worthy of your time.

Thanks for another valuable investigative story, ProPublica. If you’re drawing vehement protests from sitting representatives, you must be drawing blood - and all for the better where the public record is concerned. And as mentioned in the follow-up, the issue is precisely whether power and influence have benefitted Mr. Ross in untoward fashion.
What newspaper bailout? ProPublica offers the model. It is in the vanguard of what I hope will be a coming wave of nonprofit news outfits that are empowered to shine a bright light where it is so sorely needed and, if necessary, draw blood.

Richard Blackford

Sep. 23, 2009, 9:22 a.m.

Wait a minute. I am as distressed as anyone over corporations buying influence from our representatives who are supposed to be working for the citizenry and supporting meaningful, effective healthcare reform.  But frankly I don’t see the story here.  A 32.9% return on a building is a pitiful return for a commercial building over a nine year period during the height of the real estate boom.

The sale of the actual pharmacy business (not including land and improvements) and inventory along with the non-compete agreement for somewhere between 600K and 1.25 million also seems reasonable considering the inventory of drugs and other expensive healthcare related items involved.  This seems like a Fox News innuendo type non-story. Why can’t you give us the real amount of the sale?  Why is the amount so vague? 

I don’t know Mr. Ross, I don’t live in Arkansas, and I don’t care a bit for Mr. Ross’ obstructionist position on much needed health care reform.  But I do research my opinions as best I can.  And this is what I learned from your story and the appraisal reports you posted:

The building was sold in 2007, before the real estate crash.  The independent appraisal dated less than a month ago is absolutely worthless in appraising the value two years ago and I can’t believe you tried to pass that off.

More importantly, you haven’t said what happened to the property.  If you have evidence of a buyer that never intended to operate a pharmacy on site, a buyer who was not purchasing it in order to remove competition with another business in the same town, you might have a story. But RiteAid and Wallgreens have been doing that all over the country. Who was the buyer?

The real story, the questions you should be asking, is what influence has the $602,798 contributions Mr. Ross received from health care providers, along with the $154,562 from insurance companies and the $133,156 from hospitals and nursing homes bought over the last nine years.  These figures come from OpenSecrets.org and it’s this aspect of our democracy, this type of bribery our representatives engage in, that needs to be exposed.  Please give us a real story.

Richard Blackford

Sep. 23, 2009, 10:18 a.m.

In the updated story with Politico you explain more about the buyer LaFrance, and I can see where there could be reason for concern with the additional information.  But you are still making a big deal out of a worthless appraisal.  Thank you for mentioning the other money Mr. Ross collects as contributions in the update article.

Terry Bearden

Sep. 23, 2009, 3:18 p.m.

I live in Mr. Ross’ district and had the unusual opportunity to drive through Prescott a few weeks ago. I say unusual it’s rare for anyone to drive through Prescott. It is one of the many small mill-towns in south Arkansas that are dying.
I knew that Mr. Ross’ wife owned the town pharmacy, although I had forgotten about the sale. I knew that Mr. Ross has been hailed as a “Blue Dog” Democrat for his role in obstructing health care reform. I am an involved, informed citizen, receive his newsletters and have contacted him several times by email and voicemail to voice my displeasure with his stance on health care reform considering that 1 in 5 of his constiuents are without health insurance and many live at or near the poverty level.
The town of Prescott is a shining example of good-old-boyism gone wrong. As I passed through the town, I was not surprised by the sights…boarded up businesses, a dead town square, run-down old houses - some vacant, others still being lived in - and all of the other markers of a town that dried up when the mill closed. And, then, lo-and-behold, what did I see? Big McMansions, manicured lawns, a shopping strip center…and Holly’s Health Mart (why doesn’t the sign say USA Drug, like all the other La France stores? Local name recognition, perhaps?). Hmm…the neighbors must have gotten a big bump in property values after the favorable sale of Holly’s.
As to the comments about the real estate boom, Arkansas never played in that game. The property values in Arkansas have remained comparatively steady through all the bubble-and-burst of other states…we are a poor state (median household income = +/- $46k and our land is comparably valued, with the exception of the NW corner where the Wal-Mart corporate HQ is located.
While Mr. Ross has plenty of time to respond to your coverage and knows enough about people who are vocal about opposing him and his Republican-light views on health care reform to characterize us as “leftists,” he obviously is too busy cashing his checks to take the time to respond to voters like me, as all I have received from him are form email replies.

ROBERTO ALEJANDRO GLAUBACH

Sep. 24, 2009, 5:13 p.m.

It seems to be an unethical behaviour,so,let´s hear what does Mr Ross have to say,because the whole situation is at least suspicious
Glaubach Roberto

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